THE ban on nine banks from operating in the forex market and the insistence by the Central Bank of Nigeria that they remit $2.12bn NNPC funds to the TSA account with the CBN mayhave dire consequences on the affected banks, and by extent, worsen the financial crisis in the country.

Already the ban has deepened forex scarcity in the country with the naira going for as much as N412 to a dollar at the parallel market as against the N397 it went for before the crisis escalated.

Also, on the interbank forex market, the spot rate of the naira fell to N316.84 to the dollar, lower than the N315.93 to the dollar it closed the previous day.

National Daily gathered the situation has put further pressure on the parallel market which had been experiencing liquidity squeeze in recent times.

“What it means is that their customers would have to go to the parallel market for dollars. As you are aware, since the ban of 41 items from the interbank market, the parallel market has been under pressure, and the ban of these banks has further increased the pressure,” a trader said.

Experts argued that the ban might also trigger financial crisis for the affected banks, asking the CBN to be lenient as most of the affected banks do not have fund due to the present economic situations.

“We should not kill an ant with a sledge-hammer. Banning nine banks from the forex market at this time of recession will worsen the situation,” Pascal Odibo, CEO of Jeff & O’Brien Group said, warning the ban would deny importers and forex users the opportunity to obtain forex through erring banks, ramping up pressure on the black market.

“The implication is that everybody will go to the parallel market to source for forex and this will continue to push up the rate,” warned Odibo, who suggested fines rather than a ban which had pushed banking stocks down.

Although United Bank for Africa was readmitted after remitting $350. Shares in some of the banks hit dropped by up to 7.8 percent. Skye Bank fell the most of those suspended from foreign exchange transactions, shedding 7.81 percent, followed by Fidelity Bank down 3.0 percent. FBN Holdings shed 1.9 percent while Diamond Bank and FCMB were down 0.8 percent. The falls pulled the main index down 1.8 percent.

Most of the banks have issued press statement assuring customers that the setback would not affect their deposits.

“We are confident in our ability to meet and honour all our obligations as at when due and are currently in talks with the CBN and other relevant bodies and are positive of an amicable resolution soonest,” FirstBank stated in its statement.

Similarly, Fidelity Bank in its release assured its customers that it would continue to honour its obligations and operate with the highest level of corporate governance, stressing that the development will not affect customers deposits/loans, remittances, transactional services and electronic banking services.

According to the statement, the bank said in line with the arrangement it had with the NNPC and CBN at the commencement of the TSA in 2015, it had repaid over $288 million of the said funds in line with the advised repayment schedule.

Keystone Bank, also in a statement signed by the management, said it had engaged in efforts that were geared towards very timely resolution.The bank said the development did not adversely affect customers’ existing transactions with it except that there would be constraints in establishing new letters of credit until the issue was resolved.

Another affected bank, Heritage Bank, said it would continue to treat forex transfer, remittance from domiciliary accounts, establishment of non-valid for FX form Ms and establishment of Letter of Credit on the bank’s offshore lines.

The Central Bank of Nigeria had last week suspended nine banks from all foreign exchange transactions for failing to remit the Nigerian National Petroleum Corporation (NNPC) dollar funds to the Treasurer Single Account as directed by the Federal Government last year.